I work as a Research Scholar at the Center for Health Policy and Inequalities Research at Duke University. I also am an Adjunct Scholar at American Enterprise Institute and Mercatus-Affiliated Senior Scholar. Having been trained in policy analysis at the Pardee RAND Graduate School, I have decades of experience in evidence-based health policy at the federal and state level, specializing in health services regulation and the social burden of illness. I've taught health policy and the politics of health care in the Terry Sanford Institute of Public Policy, the Duke School of Medicine and the Fuqua School of Business at Duke. My latest book is "American Health Economy Illustrated."

The author is a Forbes contributor. The opinions expressed are those of the writer.

How the Affordable Care Act Reduces Our Liberty

With one to two weeks left before most schools begin their fall semester, there’s still time left to squeeze in a bit more summer reading. So if healthcare policy is your idea of a beach read, grab a copy of Why Obamacare is Wrong for America.

Authored by former OMB associate director Jim Capretta, American Enterprise Institute resident fellow Tom Miller, Heritage Foundation senior fellow Bob Moffit, and Galen Institute president Grace-Marie Turner, the book makes nuances of the debate over the Affordable Care Act (ACA) palatable to a lay audience by breaking down the law into eight pillars. This book nicely elaborates on the government takeover concerns I voiced in my earlier column.

The first two pillars are mandates on individuals (to obtain) and employers (to provide) health coverage. These are unprecedented. Most people can go without healthcare longer than they can make it without food. Yet, even for a necessity such as food, lawmakers do not impose any remotely equivalent restrictions on freedom of choice.

Even recognizing that free people sometimes may make very misguided choices about what they eat, with adverse consequences to both their health and to society, America has historically respected the rights of individuals to choose what, when and how they eat. But in the case of health care, ACA revokes those kinds of rights—saying government knows best and penalizing citizens and employers who disagree.

More worrisome still, over the next 75 years the CBO’s latest long-term spending projections show even with ACA (which, remember, was supposed to “bend the cost curve”), the federal government will increase in size by 48 percent relative to the economy. Fully 100 percent of that increase can be attributed to growth in federally funded healthcare entitlements, i.e., Medicare, Medicaid and exchange subsidies.[1] There are very real and legitimate questions about the ability of the federal government to finance these entitlements over the long term.

As more than 100,000 Medicaid recipients who were suddenly tossed off of TennCare discovered a few years ago, things can turn ugly quickly when governments discover they no longer can afford their generous health promises.

The fourth pillar is “squeezing funds out of Medicare and choking off private plan choices.” These funds include a combination of reductions in spending as well as new Medicare-related taxes. As Medicare’s public trustee Charles Blahous has demonstrated, the half trillion in resources diverted from Medicare either can be used to shore up Medicare or they can be used to bankroll the new Medicaid and Exchange entitlements. They cannot be used to do both.

Because these “Medicare funds” instead will have been spent on the new entitlements, the government will have to borrow additional funds to keep Medicare afloat. An estimated $136 billion of those savings will come in the form of cuts to Medicare Advantage plans, resulting in half the seniors who would have joined such plans by 2017 being forced back into the inefficient and fragmented fee-for-service Medicare system. Instead of giving seniors genuine choices that would reward plans that provide coordinated and effective care (and produce sizable savings to Medicare to boot), ACA has stacked the decks in favor of a badly outdated fee-for-service model that decades of research has shown costs more than it should even while producing worse outcomes.

The fifth pillar detailed by the authors is the more than one half trillion in new federal taxes. (For the adverse consequences of these levies, see this earlier post.)

The seventh pillar is federal government-sponsored health plans. At least two national plans created by the U.S. Office of Personnel Management must be offered in each state exchange even if the state has no interest in them. These plans will compete on a playing field stacked in their favor, since the OPM has the discretion to use less rigid rules than those faced by private insurers (e.g., how much to spend on administration).

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I think it would be fine for the government to step away from providing health care. But the main cost drivers are the hospital and pharmaceutical industries, which profit handsomely from government largesse, and will be in a pickle if it is withdrawn. Unfortunately, that means that a lot of shareholders, highly paid administrators, and ordinary job-holders will be out in the cold if the “industry” collapses.

“Healthcare” has become more about creating money and jobs than actually taking care of people.

So, Forbes, put your money where your mouth is. Stop ALL the subsidies. Get the government out of the “healthcare” market — it isn’t a market anyway, just a bunch of opaque agreements among powerful manipulators.

While you are at it, how about advocacy for getting rid of subsidies for agriculture — food is the other issue in this article.

I think there’s a legitimate role for government in providing a safety net for those who cannot afford basic necessities such as food and medical care. But especially given that each extra tax federal dollar shrinks the economy by 44 cents, it makes little sense to be using tax dollars to bankroll hospital or prescription drugs under Medicare for people such as Warren Buffett.

When people cannot afford food, we give them a voucher to purchase what they need in private grocery stores. We don’t force store to cross-subsidize those purchases by underpaying them and forcing them to charge higher prices to everyone else. Nor do we make food stamps universal under the misguided communitarian view that we’re all in this together. We can quibble about the details of whether the food stamp program could be more sensibly managed in terms of what purchases are allowed. But for the most part we manage to provide this safety net without distorting grocery markets or interfering with the liberty of everyone else. Note also that most Americans are perfectly comfortable with what amounts to a two-tiered food system. Food stamps are desired to provide a nutritionally balanced diet to its recipients, but would not allow for the regular purchase of steak and lobster. But for some reason, many health reformers find such a notion in health care an anathema.

I’m no fan of the agricultural subsidies you describe. But the fact that these have endured since the Great Depression even though the crisis they were intended to address is long gone starkly illustrates one of the central risks of the Affordable Care Act. Once it is fully implemented, its massive distortions and limitations on freedom will live with us for decades or longer.

In no society do members have complete liberty, in any sense. Your freedom to swing your fist ends at my nose, as someone once said. By participating together in society, as opposed to being hermits, we necessarily accept some limitation on our liberty. Speaking of an expansion of health care availability as restricting liberty is only imaginable to those who are either affluent enough to pay for health care on their own, or who are securely in possession of quality health insurance. To others in need of health care, there is no restriction on liberty quite as terrible as knowing that life-saving (or life-changing) care exists, but you don’t have the means to access it. In addition, none of us are able to meet our own needs–let alone our wants–by ourselves. Not only are we not independent, we are INTERdependent. One of the important questions that is usually absent from debates on health care and other social benefits is, “What do we owe to strangers simply because they are also members of society?” Interdependence is nowhere more evident than in the issue of healthcare. As a society, we have determined that at least emergency health care is a right. Beyond that, ambivalence rules. While we established and fund a variety of healthcare programs, they are a patchwork of programs created through compromise. This patchwork–including the Affordable Care Act–do nothing to restrain the crippling rise in health care costs. Most Americans would experience a true increase in liberty if, like most so-called ‘advanced’ economies, had a government-provided or regulated universal national health system. We owe this to each other as members of society.

“Yet, even for a necessity such as food, lawmakers do not impose any remotely equivalent restrictions on freedom of choice.”

Lets talk about freedom of choice! As of right now I work part time at a major university my wife is an attorney. With our combined salary and student loan debt (which with income based repayment amounts to $0/month) we still cannot afford health insurance and it is not offered by our employers. I would say currently I have no choice.

With ACA I will have a choice of a much more affordable health care plan. In essence I am gaining choices not having them taken away. Also if in the future I make more money I might be able to get a private plan with better options, who knows. The point is this help individuals more than it hurts.

Right now due to an accident I have medical debts these could have been avoided if I’d have had an affordable health insurance option. As one of the millions of individuals without health insurance I have to say that I really don’t care how it gets done, I don’t care if I have to pay higher taxes because even then it’s far cheaper than private health care plans. Have you seen the rates?! I would say you haven’t simply because it’s offered through your employer and you are out of touch with reality.

We the People of the United States NEED the ACA and that’s all there is to it. If you don’t want the ACA then create a law forcing hospitals to only charge a certain percentage above cost… I was charged $350 for a piece of foam and velcro. You might argue that inhibits free market… but then again maybe you simply don’t care about human beings.

I can’t believe that an intelligent couple such as yourselves would take your health for granted and risk accident or illness due to the fact that you say you have no choice? This is the greatest problem in health care in America and until people start taking their own self-care seriously we cannot help each other…So those who are responsible owe you the privilege of intervention because you were not responsible and had an accident? You can’t have it that way in a free society. Those who take responsibility for their own self-care are not indebted to those who won’t or don’t…My labors don’t guarantee you a hospital bed. You have no right to health care. Take your health seriously and get a catastrophic insurance plan. Sorry for your misfortunes.

The problem really comes from half measures. Government needs clear rules to work efficiently so it should either simply provide health care or not.

I understand that this is Forbes and there are mostly free-marketers out there. Probably most of you don’t believe that efficient & government ever belong in the same sentence, and you may be right. However, I would like to make an argument for the evil thing called single payer health insurance.

You don’t have to be a flaming liberal hippy to understand that health care in America is too expensive. We easily have the largest GDP of any country but we still pay 16% of that on health care. No other country pays more than 10%. All of Germany put together, the 5th largest economy in the world, could not pay our health care bills. And as far as quality goes, we may train the best doctors in the world but for some reason we still have a 2-5 year gap in life expectancy, which I think is a rather important statistic.

The problem is that it is not a free market at all. There is pretty much no choice when it comes to choosing insurers. Drug companies spend far more on advertising than on R&D. Costs keep rising because we are simply told they have to.

If we were in a single payer system we could say we aren’t paying that.

I know its anametha to anyone here to give the feds more power, but the truth is government health care here to stay. You are never going to budge the nearly 50 million people off Medicare. They pretty much always vote and always vote against the guy that wants to cut their health care because they are going to die soon.

Our system currently is something like 40% government payed & 60% personally financed. Most single payer systems are more like 60% government so their is still room for the market and insurers past the bare minimum coverage.

For those on your high horse about a welfare state, well you may have a point, but you are overblowing it. Poor people will never be treated for cancer it simply costs too much. The insurers now realize that and filter those people out (not like death panels at all). They may, however, be able to go to a doctor when they have blood in their stool and get some sort of guidance.

If our health care costs in America were anything on the order of other countries in the world, Medicare would be essentially free. We pay something like 2.5 trillion dollars when 1.5 is what it would cost everyone else.

1. Many of your cross-national comparisons are misleading/mistaken. The U.S. health system isn’t nearly as bad as you describe. http://articles.latimes.com/2012/mar/15/opinion/la-oe-conover-health-myths-20120315.

2. As one example, nearly 90% of differences in health spending across countries can be explained by differences in per capita GDP. Properly analyzed, the U.S. “overspends” relative to other countries by about 1.5%; single payerr countries such as Canada and Britain underspend by more than one fifth, suggesting a degree of rationing most Americans would not find tolerable. For example, Fraser Institute has documented that waiting lines in Canada grow longer with every passing year. http://www.fraserinstitute.org/publicationdisplay.aspx?id=2147484001 I don’t aspire to have more Americans waiting in line for care, do you?

3. That said, the U.S. system assuredly needs reform. The current system actually is headed towards being 2/3 financed by taxes, not just 40%. http://articles.latimes.com/2012/mar/15/opinion/la-oe-conover-health-myths-20120315.

4. In my view, that trend is moving us in the wrong direction and a single payer health system would be the worst place of all to head. There’s many reasons, but here’s the most important. At most, only about 1/5 of the population needs government assistance with paying their medical bills.

Let’s just roughly say we now have a $3T health system. Every dollar in taxes reduces the size of the pie by 44 cents. So if we collectivize the entire $3T, we have to be prepared to live with a GDP that is $1.3 trillion smaller! If instead we sensibly limit government subsidies only to those who need it, the reduction in GDP is only 1/5 this amount, i.e., under $300B. No single payer system in the world can possibly squeeze $1T in savings out of our current system. Thus, a single payer system would reduce social welfare, not increase it. Even though much of the true social cost would be hidden (in the form of lost production that is unseen), the total cost would be higher under single payer AND we would have longer wait times to boot.

Start with the fact that the “healthcare” market is not a free market. It is rigged from the get-go 1. Insurance companies get a pass from FTC, and engage in all sorts of anti-competitive behavior (apparently a WWII holdover) 2. Hospitals charge whatever they want to, and are never honest about what their bills are. They are deliberately obfuscating, and border on fraud. There is no transparency in that market. 3. Some hospitals (“critical access hospitals”) are practically immune from the government price-fixing and insurance company price-fixing that bigger hospitals are (nominally) subject to. They have licenses to coin money at public expense. 4. Doctor fees are fixed by the government (medicare/medicaid) and the insurance companies use government-set “allowable charges” as a base for their calculations of what the doctors must accept. There is no free market there. 5. Technology has lowered the price of almost everything except medical technology. CAT-scans and MRI’s should be cheaper now than they were 10 years ago — they are not. And medical imaging is one of the areas that is causing the explosive growth of medical costs.

I argue that if there were anything like a free market in medicine, and an end to non-transparent subsidies that prices would come down significantly, and demand would also probably decrease — it is impossible to predict what would actually happen because the market is so distorted.

Unfortunately, the “free market” advocates in the Industry and in Congress continue to promote this system, blaming the results on the “progressives” or the “socialists.”